The AI Bubble: Will It Burst Soon?
July 19, 2024, 9:42 am
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Over the past few years, artificial intelligence has been the hottest topic in tech. Nvidia stocks have soared, and it seems like we'll be warming ourselves by the working GPU card rather than a radiator on long winter evenings. But as the laws of drama dictate, euphoria can't last forever, so a twist is on the horizon.
The graph hints at history repeating itself. Writing code with ChatGPT and browsing memes in free time is great, but some folks in the investment world are wondering: where are the profits, really?
Goldman Sachs recently released a report titled "Gen AI: too much spend, too little benefit?" The main takeaways: companies plan to spend over $1 trillion on AI-related capital expenditures in the coming years, but these investments haven't yielded significant results yet, except for improving efficiency among developers.
Daron Acemoglu from MIT believes AI won't have a significant impact on the US economy in the next 10 years, forecasting a 0.5% productivity increase and a 0.9% GDP growth during that time. Jim Covello from Goldman Sachs thinks AI is too expensive and not suited for solving complex tasks that justify the costs.
The growing demand for electricity for AI-required data centers could lead to power shortages, especially in the US. But there are optimists too. Joseph Briggs from Goldman Sachs predicts that AI will automate 25% of all work tasks, increase US productivity by 9%, and boost GDP by 6.1% in the next 10 years.
In my recent blog post, I expressed skepticism about AI's integration into business. There's a rise in FUD (Fear, Uncertainty, and Doubt). Jensen Huang is already selling his shares for $169 million, and even old Bezos is slowly cashing out. Are we headed for a crash akin to the dot-com bust?
I'm not keen on diving into stock market predictions, as I'm more interested in the technology itself. And from my perspective, its prospects are still bright. Size still matters: increasing network sizes leads to improved quality. That's why tech leaders are buying up hardware from the market and seemingly ignoring economists' reports. Elon Musk, for example, is investing in a $10 billion cluster because computers are the new oil and a future asset.
Without it, there won't be progress in creating new networks, and even to run current models, hardware is essential. OpenAI is increasing cash flow by providing access to its latest models for regular folks, and they're thriving on that 3%.
As for the massive economic impact of AI, the explosion will start after the emergence of cheap androids, which are slowly being produced. There will be huge money involved, but that's in the future. For now, let's watch the disappointment unfold.
The graph hints at history repeating itself. Writing code with ChatGPT and browsing memes in free time is great, but some folks in the investment world are wondering: where are the profits, really?
Goldman Sachs recently released a report titled "Gen AI: too much spend, too little benefit?" The main takeaways: companies plan to spend over $1 trillion on AI-related capital expenditures in the coming years, but these investments haven't yielded significant results yet, except for improving efficiency among developers.
Daron Acemoglu from MIT believes AI won't have a significant impact on the US economy in the next 10 years, forecasting a 0.5% productivity increase and a 0.9% GDP growth during that time. Jim Covello from Goldman Sachs thinks AI is too expensive and not suited for solving complex tasks that justify the costs.
The growing demand for electricity for AI-required data centers could lead to power shortages, especially in the US. But there are optimists too. Joseph Briggs from Goldman Sachs predicts that AI will automate 25% of all work tasks, increase US productivity by 9%, and boost GDP by 6.1% in the next 10 years.
In my recent blog post, I expressed skepticism about AI's integration into business. There's a rise in FUD (Fear, Uncertainty, and Doubt). Jensen Huang is already selling his shares for $169 million, and even old Bezos is slowly cashing out. Are we headed for a crash akin to the dot-com bust?
I'm not keen on diving into stock market predictions, as I'm more interested in the technology itself. And from my perspective, its prospects are still bright. Size still matters: increasing network sizes leads to improved quality. That's why tech leaders are buying up hardware from the market and seemingly ignoring economists' reports. Elon Musk, for example, is investing in a $10 billion cluster because computers are the new oil and a future asset.
Without it, there won't be progress in creating new networks, and even to run current models, hardware is essential. OpenAI is increasing cash flow by providing access to its latest models for regular folks, and they're thriving on that 3%.
As for the massive economic impact of AI, the explosion will start after the emergence of cheap androids, which are slowly being produced. There will be huge money involved, but that's in the future. For now, let's watch the disappointment unfold.